Global| Oct 31 2005U.S. Personal Income Lifted By Insurance Payments
by:Tom Moeller
|in:Economy in Brief
Summary
Insurance payments following hurricanes Katrina and Rita rose $120B (AR) and lifted personal income by 1.7% in September after a 0.9% August decline that was much deeper than initially reported. It was the largest monthly increase in [...]
Insurance payments following hurricanes Katrina and Rita rose $120B (AR) and lifted personal income by 1.7% in September after a 0.9% August decline that was much deeper than initially reported. It was the largest monthly increase in income since a 3.7% jump last December and exceeded Consensus expectations for a 0.3% rise.
Wages & salaries rose 0.3% (6.0% y/y) last month following a downwardly revised 0.1% August increase. Factory sector wages fell 0.5% (+3.4% y/y) and service sector wages rose 0.3% (6.9% y/y).
Disposable personal income jumped 1.9% (5.3% y/y) following a 1.1% drop in August that was initially reported at -0.1%. Adjusted for prices which rose 0.9%, take home pay rose 1.0% (1.5% y/y) after a 1.5% decline in August.
The PCE chain price index surged 0.9% last month as gasoline prices jumped 16.8% m/m, but gasoline prices have since retraced much of that increase. Less food & energy prices rose 0.2% following a downwardly revised 0.1% rise in August.
Personal consumption expenditures recovered about all of the prior month's unrevised 0.5% decline even though a 2.4% m/m decline in light vehicle sales lowered spending on durables by 2.3% (+1.6% y/y). Nondurables outlays jumped 1.3% (9.8% y/y), however, adjusted for higher prices spending on nondurables fell 1.0% (+2.9% y/y). Services spending rose 0.6% (6.2% y/y).
The personal savings rate remained negative for the fourth consecutive month. The Federal Reserve indicated last week that household sector net worth (from the Flow of Funds Accounts) improved in 2Q to a four year high due to an increase in owners' equity in real estate which has averaged 11.3% per year since 2001.
| Disposition of Personal Income | Sept | Aug | Y/Y | 2004 | 2003 | 2002 |
|---|---|---|---|---|---|---|
| Personal Income | 1.7% | -0.9% | 6.3% | 5.9% | 3.2% | 1.8% |
| Personal Consumption | 0.5% | -0.5% | 6.7% | 6.5% | 4.9% | 4.2% |
| Savings Rate | -0.4% | -1.8% | 1.5% | 1.7% | 2.1% | 2.4% |
| PCE Chain Price Index | 0.9% | 0.4% | 3.8% | 2.6% | 1.9% | 1.4% |
| Less food & energy | 0.2% | 0.1% | 2.0% | 2.0% | 1.3% | 1.8% |
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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